The benefits of in-sourcing

By Lauren Duensing

February 2010 - In an economy that’s heavily focused on global growth, a growing number of consumers are choosing to employ friends and neighbors, create unique communities and sustain future generations by supporting local businesses.

Individuals can pick up produce from their local farmer’s market or shop at the corner store, but ThyssenKrupp Stainless USA is part of an effort to stimulate a local economy on a much grander scale, with its new $4 billion, world-class, state-of-the-art steel and stainless steel processing facility in Calvert, Ala. The project is a cooperative effort between the steel and stainless steel segments of ThyssenKrupp USA.

The stainless steel melt shop will have an annual capacity of up to 1 million metric tons of slabs, which will be processed on a hot-strip mill. And it will provide ThyssenKrupp Mexinox, San Luis Potosi, Mexico, with 340,000 metric tons of hot band--its required pre-material.

Expand in the USA
The new facility will be one of the largest private industrial development projects in the United States during the next decade. Construction work on the site is expected to create about 29,000 jobs. When fully operational, ThyssenKrupp will employ about 2,700.

ThyssenKrupp chose the Alabama site after an exhaustive process in which it reviewed 67 potential sites in 20 states. It narrowed down the candidates to locations in three states: Alabama, Arkansas and Louisiana. The company considered many factors, including the sites’ access to transportation, fuel and utility costs, the ability to recruit employees, the potential economic and fiscal impact on the surrounding region and business incentive programs available through state and local governments.

Building the facility in the United States was a logical move for the company. "We are in this market, and we know [the market] well," says ThyssenKrupp Stainless USA President and CEO Dr. Ulrich Albrecht-Frueh. "In the United States, we are already known as a stainless producer, and we have 25,000 people already here. In addition, the United States is a strong economy, so there will always be demand for our product."

Albrecht-Frueh also says he’s optimistic about the future of the U.S. economy. "The recovery of the market may be slow, but it will recover. There’s no doubt about that."

New investments always carry some risk, but ThyssenKrupp’s strategy is to keep the project efficient and flexible, concepts that will work their way down the supply chain. For instance, there’s not much warehouse space in the new facility because of the company’s emphasis on turnaround times--just-in-time products to meet customers’ needs. Albrecht-Frueh says that it’s logistically a "nightmare" and "not attractive costwise" to import products due to the long lead time. "Here, we can make a decision within days instead of weeks."

Quick turnaround is part of the company’s future growth strategy. "ThyssenKrupp has grown very much in the last few years, but the optimization process was increasing efficiencies with training programs, a change in culture, participating in good markets and being fast. ThyssenKrupp is not only a steelmaker, we are also a solution provider for someone who needs steel. Innovative solutions are deeply developed in the ThyssenKrupp mentality."

Albrecht-Frueh also says the company’s diverse product segments give ThyssenKrupp the ability to visualize its market from all sides. "You are both customer and supplier. You are a provider of car parts, a provider of metal, a service provider for maintenance, and you also use that maintenance for installing and improving your equipment."

Boosting the local economy
As a result of the new installation, the future for the areas surrounding Calvert and Mobile looks bright. "With the workforce and the mentality here, people will recognize the Mobile area as a technical, high-skilled area," Albrecht-Frueh says. "The local economy will be supported tremendously."

He also notes that the ThyssenKrupp facility will bring business growth in its wake. "As a consequence, you will find business growth around Calvert, spreading around Mobile into the county, providing jobs, providing opportunities. For example, suppliers will decide to put their raw materials in Mobile because they will be closer to the plant, it will be more flexible and the whole supply chain will move fluently."

Of course, jobs for the entire community will be another opportunity the new plant brings to the area. ThyssenKrupp is partnering with Alabama Industrial Development Training, the nation’s No. 1 industrial training program. AIDT’s services comprise recruiting and preselection of blue-collar workers, on-the-job training and further development of the workforce after hiring.

As of Dec. 30, 2009, ThyssenKrupp had received 50,000 applications through AIDT. Of those applicants, 8,851 completed orientation, 6,070 completed the interview process, 3,240 completed pre-employment training and the qualified applicant pool the company will select from is approximately 2,000.

According to Mary Mullins, director of communications, ThyssenKrupp Stainless USA, "AIDT helps us screen thousands of applications, through which additional training is provided free to qualified applicants. If they don’t gain employment with our companies, applicants are still empowered with additional skills that make them more employable. In addition, there’s a description of the core values of the ThyssenKrupp Stainless USA team members. Each team member commits to these values and signs a pledge of that commitment upon hiring."

Ultimately, ThyssenKrupp intends this new facility to be a model for 21st-century industry. "With a greenfield project like this, ThyssenKrupp has the chance to create something new. The relationship to the people, the working culture--you can develop something which complies with all the things you want to do," says Albrecht-Frueh. "Sometimes, if a big company wants to change, it can take time, but if you create something new, we can say that there will be a new culture created in this company. If you install values and a leadership model from the first day, you can design it in the best way you think this company could work, do good quality, be a service provider for steel and, of course, be successful and flexible." MM

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